Seafolly Pty Ltd v Madden (No 5)

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FEDERAL COURT OF AUSTRALIA

Seafolly Pty Ltd v Madden (No 5) [2014] FCA 1413

Citation: Seafolly Pty Ltd v Madden (No 5) [2014] FCA 1413
Parties: SEAFOLLY PTY LTD v LEAH MADDEN
File number: VID 764 of 2010
Judge: TRACEY J
Date of judgment: 23 December 2014
Catchwords: COSTS – costs of substantive proceeding – costs of stay application – exercise of discretion to award costs – consideration of success of the parties on the significant issues agitated at trial – consideration of conduct at trial – whether apportionment of costs appropriate – whether costs should be awarded on an indemnity basis – whether respondent entitled to interest on judgment pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth)
Legislation: Copyright Act 1968 (Cth)
Federal Court of Australia Act 1976 (Cth) s 51A
Federal Court Rules 2011 (Cth) rr 40.02, 41.03, 41.11
Trade Practices Act 1974 (Cth) ss 52, 53, 82
Cases cited: Madden v Seafolly Pty Ltd (2014) 313 ALR 1 – cited
Madden v Seafolly Pty Ltd (No 2) [2014] FCAFC 49 – cited
Seafolly Pty Ltd v Madden (2012) 297 ALR 337 – cited
Seafolly Pty Ltd v Madden (No 2) (2013) 99 IPR 539 – cited
Seafolly Pty Ltd v Madden (No 3) [2013] FCA 316 – cited
Seafolly Pty Ltd v Madden (No 4) [2014] FCA 980 – cited
Date of hearing: Heard on the papers
Place: Melbourne
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 58
Solicitor for the Applicant/Cross-Respondent: K & L Gates
Counsel for the Respondent/Cross-Claimant: Mr M J Collins QC and Mr I P Horak
Solicitor for the Respondent/Cross-Claimant: Phillips Ormonde Fitzpatrick Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 764 of 2010

BETWEEN:

SEAFOLLY PTY LTD
Applicant/Cross Respondent

AND:

LEAH MADDEN
Respondent/Cross-Claimant

JUDGE:

TRACEY J

DATE OF ORDER:

23 DECEMBER 2014

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The respondent pay 85% of the applicant’s costs of the proceeding.

2.The costs of the respondent’s interlocutory application filed on 26 February 2013 be costs in the cause.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 764 of 2010

BETWEEN:

SEAFOLLY PTY LTD
Applicant/Cross-Respondent

AND:

LEAH MADDEN
Respondent/Cross-Claimant

JUDGE:

TRACEY J

DATE:

23 DECEMBER 2014

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

  1. This proceeding has a long history in the Court.  It was commenced in 2010 by the applicant (“Seafolly”) after the respondent, Ms Leah Madden, had posted material on her personal Facebook page in which she, in substance, alleged that Seafolly had copied some of her swimwear designs which were marketed under the White Sands label.  She also alleged that an employee of Seafolly had been sent to a private showing and had taken photographs of White Sands costumes with a view to them being copied by Seafolly.

  2. Seafolly responded by issuing two press releases in which it branded Ms Madden’s allegations as…

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Details
Case
[2014] FCA 1413
Decision Date

CaseChat Overview and Summary

Seafolly Pty Ltd brought claims against Ms Madden for passing off and copyright infringement in relation to swimwear designs. Ms Madden had cross-claimed against Seafolly for trade practices breaches and defamation. The parties appealed the costs orders made at trial. The Full Court remitted the matter back to the trial judge for reassessment of the costs. The Full Court held that the original costs order should be varied to require Ms Madden to pay 85% of Seafolly’s costs of the appeal. In the present proceeding, the trial judge considered the costs claims of both parties. The judge noted that Seafolly had succeeded on some claims but not others, while Ms Madden had succeeded on her cross-claim but not her other claims. The trial judge also considered the conduct of the parties during the trial and appeal. The trial judge decided to award the costs of the substantive proceeding to Seafolly on an 85:15 basis, in line with the Full Court’s earlier decision. The trial judge also decided to award the costs of Ms Madden’s interlocutory application to Seafolly as costs in the cause. Finally, the trial judge rejected Ms Madden’s application for interest on judgment on the basis that the judge’s original order had not considered this issue and that the statutory power to order interest on judgment was limited to the period before judgment was entered.

The key legal issues were the exercise of the trial judge’s discretion in awarding costs, whether an apportionment of costs was appropriate, whether costs should be awarded on an indemnity basis, and whether Ms Madden was entitled to interest on judgment. The trial judge considered the principles guiding the exercise of the Court’s discretion in awarding costs and the conduct of the parties during the trial and appeal. The trial judge decided that Seafolly should be awarded the costs of the substantive proceeding on an 85:15 basis, in line with the Full Court’s earlier decision. The trial judge also decided to award the costs of Ms Madden’s interlocutory application to Seafolly as costs in the cause. Finally, the trial judge rejected Ms Madden’s application for interest on judgment on the basis that the judge’s original order had not considered this issue and that the statutory power to order interest on judgment was limited to the period before judgment was entered.

Orders

Orders of the court

1. The respondent pay 85% of the applicant’s costs of the proceeding.

2. The costs of the respondent’s interlocutory application filed on 26 February 2013 be costs in the cause.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In these circumstances the appropriate order is that the costs of the application be costs in the cause.Interest on judgment Ms Madden sought an order pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth), that Seafolly pay her interest on the damages awarded to her under her cross-claim from 2 September 2010 to 29 September 2014. Judgment was entered on 12 September 2014. Ms Madden’s application confronts at least two difficulties. The first is that my order, made on that day, invited the parties to make submission “relating to all outstanding costs issues.” It did not deal with interest on judgment. The second is that s 51A only contemplates the making of an order for the payment of interest until the date on which judgment is entered: see s 51A(1)(a). The Court’s power is conferred in broad terms. Its exercise is invoked by application. Unless good cause is shown the Court can order that judgment interest be paid on the whole or any part of a judgment sum and for the whole or any part of the period between the date on which the cause of action arose and the date on which judgment was entered. Alternatively the Court may order payment of a lump sum in lieu of any such interest. Seafolly has not had the opportunity to show cause why such an application (if and when made) should not be granted. No order should be made for the payment of judgment interest.

Ratio Decidendi

Legal Principle Established

In Seafolly Pty Ltd (No 2) I set out the principles which guide the exercise of the Court’s discretion in awarding costs generally and also in cases where apportionment is sought and Calderbank offers have been made. I do not repeat what I there said. I have, however, had regard to those principles in dealing with the competing costs claims which have now been made.CONSIDERATIONCosts of the trial Once the outcome of the trial was known I determined that the usual order for costs should be made in favour of Seafolly. In doing so I was mindful of Seafolly’s mixed success in prosecuting its claims and its complete success in defending Ms Madden’s cross-claim. Ms Madden had limited success on her appeal. The Full Court found that she had not acted maliciously when she made false and misleading allegations against Seafolly and some of its staff. As a result the Full Court allowed the appeal in part, set aside my costs order and remitted the matter for an assessment of damages on the cross-claim. In the Full Court Ms Madden had sought to challenge all the adverse findings which had been made against her at first instance. For the most part she was unsuccessful in this endeavour. This led the Full Court to observe that:“… while Ms Madden did have some success on appeal, most of the substantive issues that were argued as to her liability were resolved adversely to her. Those issues took up the vast bulk of the submissions and hearing of the appeal and Ms Madden vigorously pressed them. Had she confined her case on appeal to the issues on which she succeeded the position would have been different. Having raised multiple, complex issues on which she failed, we are of the opinion that Ms Madden should pay 85% of the costs of the appeal.”See: Madden (No 2) [2014] FCAFC 49 at [12]. The “multiple, complex issues” on which Ms Madden failed were those which arose in the context of Seafolly’s Trade Practices Act claims against her and her claim to have been defamed by Seafolly. The position, following the Full Court’s decision, is that:·Seafolly has succeeded in its claims under ss 52 and 53(a) of the Trade Practices Act and obtained declaratory relief, injunctive relief and $20,000 in damages;·Seafolly’s copyright infringement and injurious falsehood claims both failed;·Ms Madden succeeded in her cross-claim against Seafolly for breach of s 52 of the Trade Practices Act and obtained declaratory relief and $40,000 in damages; and·Ms Madden failed in her cross-claim against Seafolly for defamation. In these circumstances both Seafolly and Ms Madden claimed to have been the more successful party. Seafolly did so on the basis that it had been substantially successful in vindicating its reputation and that of its employees whom it had been alleged were involved in the copying of White Sands designs. Ms Madden, on the other hand, emphasised monetary aspects of the case. She had received twice the quantum of damages which had been awarded to Seafolly and Seafolly had only received $20,000 despite having mounted a claim for $2,250,000.